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Base erosion and profit shifting: Treaty aspects


The OECD has concerns that bilateral tax treaties often fail to prevent double non-taxation that results from interactions among more than two countries. The OECD’s base erosion and profit shifting (BEPS) project is intended to address these concerns. The project relates to instances where the interaction of different tax rules leads to double non-taxation or less than single taxation, and to arrangements that achieve no or low taxation by shifting profits away from the jurisdictions where the activities creating those profits take place.

This article discusses the tax treaty aspects of the BEPS project. It focuses on the OECD’s concerns regarding tax treaty abuse and avoidance of permanent establishment status, including the sources of those concerns and the changes that the OECD might recommend to address them. The article also briefly discusses transparency, dispute resolution and the potential use of a multilateral agreement to implement some of the recommendations of the project.

Author profile

Claudio Cimetta
Claudio is a specialist international tax Partner with Deloitte. He advises multinational corporations and investment funds on cross-border transactions, including Australian inbound investment and outbound investments across Asia, Europe and North America. He has over 17 years of experience, including three years as a director in Deloitte’s M&A tax group in London. Claudio’s Australian outbound advisory experience includes a range of projects for major Australian listed companies and funds. These include foreign M&A and expansion, financing, supply chain optimisation and offshore capital projects. - Current at 17 March 2016
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